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MSLGROUP Reputation Impact Indicator Study 2015 (China Edition)

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The Age of Earned Trust: MSLGROUP’s Reputation Impact Indicator Study [China Edition]

 

 

The MSLGROUP Reputation Impact Indicator   A major global survey and report that combines both intuitive and rational dimensions when studying the reputation of leading multinationals.

 

Foreword

The reputation of a corporation is its license to operate. It has a decisive impact on the success of the organization and is generally regarded as one of its most important assets. And yet, we would argue, there is clearly a need for a much deeper understanding of the multifaceted elements that contribute to corporate reputation than currently exists today.

Anders Kempe   EMEA President for MSLGROUP

MSLGROUP has chosen to take a somewhat atypical approach to the study of reputation. Moving beyond simple rankings, or analyses of ‘drivers’ of reputation alone, we take a more holistic look at how a company must act to build a strong reputation that can facilitate success over time. The result of our research is this, t his, the Reputation Impact Indicator study, part of MSLGROUP’s ongoing efforts to create better knowledge and tools for corporations to better understand how they can influence their reputation. In the study, we have chosen to look at corporate reputation among a global general public. General public, p ublic, because how they, as consumers and citizens, view corporations has a substantial and increasingly important impact on how other audiences view them. Global, because we live in an ‘always on’ and ‘on-demand’ world, where different audiences are constantly connected to each other. Today, more than ever, a multistakeholder perspective is necessary. Among many new findings, the study also confirms a long-held assumption: actions speak louder than words. The factor with the largest impact on an organization’s reputation is simply how well it delivers its products and services, and if they are delivered in an ethical manner (you can of course follow rules and legislation, yet still fail in the court of the public opinion). In short, the study confirms that being perceived as a company that consistently delivers high-quality products and an d services in an ethical way is what matters most when it comes to building and maintaining a reputation. If actions do speak louder than words then does this mean that communication is of less importance in the building of reputations than we may have thought? No, on the t he contrary – communication has a very significant role that should not be underestimated. Not least when we consider, as our study shows, that while brands may be global, corporate reputation is most definitely local. Assuming broad brand awareness across multiple countries for the well-known global brands covered in the study, it seems clear that how a company communicates with people in different countries or regions influences what those people think of a company, how robust its local reputation is. In this sense, we should think of global corporate reputation as the sum of a company or brand’s local reputations.

The MSLGROUP Reputation Impact Indicator   A major global survey and report that combines both intuitive and rational dimensions when studying the reputation of leading multinationals.

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Foreword

Underlining our commitment to a more holistic view of corporate reputation, we analyzed how people retrieve the information that they then use to form an opinion about a company. What we found is that this is largely an intuitive process, and that abstract knowledge about a company is not enough to engender a strong reputation in the public’s mind’s eye. A significant part of a company’s reputation is a matter of

Our study findings underline that it is this more qualitative approach to brand awareness that is key to establishing a robust reputation. And authenticity and engaging storytelling are undoubtedly at the heart of any such approach.

instinct, based on how ‘relatable’ that company feels. We refer to this as the ‘Mind Space’ the company occupies. Here, communication plays an important role, as an organization needs to communicate its actions repeatedly and engage with its stakeholders, so as to build clear associations – linked to its core business – that can easily be held in a person’s mind. Our study findings underline that it is this more qualitative approach to brand awareness that is key to establishing a robust reputation. And authenticity and engaging storytelling are undoubtedly at the heart of any such approach. That an organization’s reputation is shaped most by intuitive, gut-felt pieces does not however mean that reputations can be quickly built. Instead it means that we have to think in advance: always have the communicative aspect in mind when making business decisions. MSLGROUP’s Reputation Impact Indicator study is an attempt to ‘dissect’ corporate reputation, to study the components of which it is made up, and to then take a holistic view of each one’s relative impact on reputation at both a global and industry level. I hope you find the report to be inspiring and thought-provoking reading.

Kindly,   Anders Kempe

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Introduction

Globalization has eliminated many boundaries to create a more interconnected world. It has also played a part in enabling companies to become global brands and conduits of these connections. We live in an era where McDonald’s, Coca-cola, and Starbucks could be found just about anywhere in the t he world, and the companies work very hard to make sure the same product and quality of service can be found regardless of location. Cultural differences aside, though, local, highly personal experiences can greatly affect perceptions of those very same global glo bal brands. This is the premise in the first-of-its-kind MSLGROUP Reputation Impact Indicator study in which China is included. Daisy Zhu   Managing Director for MSLGROUP China

China, along with our ‘new world’ peers India, Brazil and South Africa, tops the charts with our significantly higher Reputation Core scores, that is we are more optimistic about companies than the developed Western ‘old world’. When a nation is growing and prospering, it’s understandable its people would have a more positive outlook. But that doesn’t mean we are less demanding. A more confident China means companies face greater pressure to earn the trust of its people. Across the four industry clusters targeted in the study (pharmaceutical, Internet, FMCG and consumer electronics), China rated delivering on promises and good go od customer service as the top drivers   of corporate reputation with respect to customer relationships. Furthermore, all industries in China offered some level of participation for customers to create new products and services. None of these items were significant at the global level. The Chinese public is also rigorous about corporate behavior with acting ethically and being a positive po sitive influence on society the primary drivers of reputation. Environmental care is particularly important in China, too. The groundbreaking piece in this study is ‘Mind Space’ and the relatability of companies. We can all agree that a company’s ‘hardware’ – the products and services – drive much of our opinions about an organization but it’s the ‘software’ – the vision, the social responsibility, the relationships – that turnsChinese customers into admores or adversaries. From the study we see that consumers are demanding bett er better corporate ‘software’ and leading the charge in some industries.

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Introduction

Overall this study validates some ideas about corporate reputations and provides a fresh perspective on Chinese views about companies and brands. More importantly, it provides us with a more plausible metric for communicators to achieve business goals. This fulfills our Business-Driven Communications positioning. Communications maythe be an art but the Reputation Impact Indicator and Mind Space provides science. Through our study we can advise communications practitioners and stewards of corporate reputations on the why and how they can preserve or enhance their reputations in dynamic China, China , foster enduring relationships with stakeholders and contribute to the betterment of Chinese society. I hope you enjoy this report and it stimulates new thinking and actions for you!

Kindly, Daisy Zhu

 

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Executive Summary

The findings provide insight into what drives the general public’s views of some of the world’s best-known global corporate brands.

In the Age of Earned Trust companies need a holistic approach to build a strong reputation that can facilitate success over time. The MSLGROUP Reputation Impact Indicator is the first-of-its-kind global study of the general public to find reputation trends on a macro and industry level, as well as lay the foundations of a reputation framework for additional future research and insight. This report highlights the China findings and summarizes the global study1. The results provide insight into what drives the views held by the general public of some of the world’s best-known global corporate brands. MSLGROUP also carried out in-depth analysis of reputation drivers within four industry clusters, to study the relative impact of each for a given industry, and the differences between the four industries. The selected industries cover the pharmaceutical, consumer electronics, FMCG and Internet-based businesses sectors. The key findings from the global study include: The main dimensions driving corporate reputation today are the perception of a company’s products and services, and that company’s business behavior: How behavior: How well is the company delivering on its core business   promise - represented by the products and services - and is it seen to be doing so in an ethical, transparent way. At the industry level there are clear differences in the relative impact of different reputation drivers within each dimension, e.g. dimension, e.g. corporate behavior is significantly more important in the pharmaceutical industry compared to the other three industry clusters studied, underscoring the importance of fact-based input for reputation management.

1. The field research was conducted during the last quarter of 2014, by means of a survey on a statistically validated sample of the general public in 10 countries, totaling 26,467 qualified respondents. The survey was complemented with analysis of social media content for 10 selected companies.

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Executive Summary

Reputation drivers linked to actual consumer experience have greater significance than corporate reputation when evaluating Net Promoter Score (NPS). Unsurprisingly, there is a clear correlation between corporate reputation and NPS, and the most important driver for both is how well a company is perceived to deliver its products and services. A strong Space’ can engender a robust reputation. There is a‘Mind correlation between how easy it is forcorporate respondents to mentally associate with a specific company or brand – its ‘relatability’ - and reputation. High brand awareness alone is not enough. enough. The ideas, images, feelings one associates with a given company need to t o be easy and quick to draw upon, positive in sentiment, and linked to that company’s products and services. Companies that have this clearly defined ‘Mind Space’ will enjoy a more robust corporate reputation, while companies that do not easily invoke such mental associations, or invoke neutral rather than positive associations, will have a weaker reputation. There are also differences for which factors have ha ve the largest impact on reputation between respondents with positive, neutral and negative associations. For the former, the perception of products and services is most important, but for the latter group aspects of corporate behavior play a more significant role. Important discoveries from the research: •



An optimistic ‘new world’ versus a skeptical ‘old world’. world’. Contrary  Contrary to traditional thinking, China, along with ‘new world’ peers Brazil, India and South Africa, has a more positive perception of companies than counterparts in North America, and particularly Europe, where respondents can be said to demonstrate greater skepticism towards   companies in general. Brands are global, corporate reputation is local. There local. There are large variances in the reputation of individual companies at a country level. Even though a brand is recognized globally, the reputation of the company is local.

  Social media content reflects the relative importance of the reputation dimensions. A dimensions. A large majority of discussions online are about topics related to company products and services, and this is also the area with most un-aided engagement. A majority of negative posts online are related to corporate behavior, confirming the negative impact of this dimension.



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The Study “…and yet, we would argue, there  is clearly a need for a much deeper understanding of the multifaceted multifac eted elements that contribute to corporate reputation than currently exists today.” 

Anders Kempe President, EMEA, MSLGROUP

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The Study

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Given the sheer volume of data that now washes across our screens, it would stand to reason that a customer’s view of a company or brand is now necessarily arrived at more quickly, and therefore intuitively, than in days past.

A New Age, A New Charter for Reputation With the ever-increasing volume of communication and number of information channels around us, it is crucial that companies use fact-based input to evaluate which elements have the largest lar gest impact on their reputation. These factors will of course vary across industries and markets, and also depend on the audience. Given the sheer volume of data that now n ow washes across our screens, it would stand to reason that a customer’s view of a company or brand is now necessarily arrived at more quickly, and therefore intuitively, than in days past. Most reputation modelling or reporting assumes a rational, deliberative model. None have tried to quantify a more intuitive approach, let alone figure out how first impressions impressions turn into long-held views. And this is one issue at the heart of MSLGROUP’s Reputation Impact Indicator study: How does the intuitive, gut-feeling view an individual holds about a company impact upon that company’s reputation?

 

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The Study

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A New Reputation Framework Combining Rational Response with Intuitive Associations: The MSLGROUP Reputation Impact Indicator

Robert Gelmanovski

The MSLGROUP Reputation Impact Indicator is one of the first studies to examine the link between spontaneous, intuitive associations with companies and a more deliberate and rational response to statements about companies. We aim to layer intuitive intuit ive brand associations and expectations over a more traditional, ‘deliberate’

The research also sheds light on the drivers of corporate reputation and the challenges of managing corporate reputation from a global perspective. This has been achieved through a detailed exploration of the drivers of reputation and the relative significance of each driver across industries and markets. The resulting model, the Reputation Impact Indicator, is based on a Reputation Core consisting Core consisting of three questions: • Do you like like company  company x? • Do you trust trust company  company x? • Do you respect respect company  company x?

reputation measurement approach with this study.

ABOUT THE RESEARCH The research behind the Reputation Impact Indicator was designed by Robert Gelmanovski, a researcher in reputation Gelmanovski, management at the Royal Institute of Technology in Stockholm (KTH) – who is affiliated with MSLGROUP in the Nordics, and Dominic Payling, Director and Head of Planning & Insight at MSLGROUP in London, alongside a reference group of senior consultants from MSLGROUP’s global network. The research was then conducted by Robert Gelmanovski. A statistically validated sample of the general public aged 16–65 in 10 countries was surveyed in the last quarter of 2014 in online panels provided by CINT, a company with a presence in more than 60 countries. A total of 26,467 interviews in 10 countries were conducted, at least 2,500 interviews per country. Countries covered: United States, Canada, United Kingdom, France, Germany, Sweden, China, India, Brazil, and South Africa.

26,467

10 countries

The questionnaire consisted of 38 questions on reputation, plus background questions on media consumption, age, and educational background.

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interviews

 

The Study

ABOUT THE KNOWLEDGE BASE Fombrun, Charles J., Naomi A. Gardberg and Joy M. Sever (2000), ‘The Reputation Quotient: A Multiple Stakeholder Measure of Corporate Reputation’, The Journal of  Brand Management, 7 (4), pp. 241–255. Wartick, S. (2002), ‘Measuring Corporate Reputation’, Business & Society, Vol. 41 No. 4, pp. 371–392.

Answers to the three questions around the Reputation Core were then combined and expressed as an index from 0–100, giving an indication of a company’s reputation. In order to better understand what is driving the Reputation Core Index we then looked at four dimensions that contribute to the building of reputation, each reflected through a number of questions:

Helm, S. (2007), ‘One Reputation or Many? Comparing Stakeholders’ Perceptions of Corporate Reputation’, Corporate Communications: An International Journal, Journal, Vol. 12 No. 3, pp. 238–254.

1. Strength of relationship (how well a company builds relationships with external audiences)

Walker, K. (2010), ‘A Systematic Review of the Corporate Reputation Literature: Defin De finition, ition, Measurement, and Theory’, Corporate Reputation Review, Vol. 12 No. 4, pp. 357-387.

3. Perception of corporate corporate behavior behavior

2. Perception of of products and services

4. Perception of financial performance These four dimensions were drawn from international academic research in the field of reputation and are reflected in a number of questions, with each question then correlated to the Reputation Core – thus identifying reputational drivers.

ABOUT THE METHODOLOG METHODOLOGY Y The questionnaire was divided into two parts: one covering spontaneous associations and expectations, and a second part with 25 reputation statements with a 7-grade scale (1 = do not at all agree, 7 = agree completely). Answers were indexed to a scale 0–100. An index difference of 2 points was considered statistically significant.

Underlying the results in each area is ‘reputation content’, i.e. the messages and conversations linked to a company, the majority of which are today delivered and digested via digital channels. channels. We analyze reputation content across multiple channels and then link that content to the reputation dimensions and the Reputation Core, thus exploring which pieces of content are building or eroding reputation.

Respondents were asked to evaluate 41 global corporations, chosen because of their corporations, worldwide operations and international outlook, and only respondents with a higher degree of brand awareness of the companies (‘somewhat familiar’ or ‘very familiar’) were allowed to complete the survey. In parallel with the quantitative research, online content was analyzed for 10 of the 41 companies, with this content categorized into one of the four reputation dimensions of the MSLGROUP Reputation Impact Indicator model. While we have chosen to focus on the overall findings and implications of the research for reputation management, not on company-specific company-spe cific insights, data about individual companies is sometimes used to illustrate a general point.

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Mind Space: Measuring the Strength of Brand Awareness Companies and brands rely on the brand awareness metric to validate how well the organization is doing in a market or the performance of a marketing campaign. This metric is useful in establishing benchmarks and standards for evaluation, but wouldn’t brands want to know how easy consumers or audiences were able to recognize a brand? Is this brand awareness built on positive, negative or neutral associations? How does brand awareness relate to corporate reputation? The MSLGROUP Reputation Indicator Index differentiates from other reputation studies by exploring intuitive reputation awareness or the mental associations related to a particular company or brand. When this is linked to a more rational, deliberate view of reputation, the results show a profound impact on corporate reputation: by creating spontaneous associations with a company, we create a metric that demonstrates strength of brand awareness.. We call this capacity awareness ‘Mind Space’.

 

The Study

MSLGROUP’s Reputation Impact Indicator model Examining the relationship between the Reputation Core, the underlying reputation drivers and the content produced by and about companies.

Reputation Content

Reputation Drivers

Reputation Core

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The Study

Definitions and explanations of concepts

Alongside the four dimensions of reputation, the study also looks at intuitive reputation awareness and the impact on corporate reputation. This intuitive aspect of reputation is then linked to a more rational, deliberate view of reputation.

Corporate reputation:  reputation:  The general collective judgment of a corporation based on assessments of the impact of performances and actions attributed to the corporation over time. NPS, Net Promoter Score: The inclination to recommend a company. Brand awareness: The extent to which a brand is recognized by potential customers, and is correctly associated with a particular product or service. ‘Mind Space’: The ease with which a respondent can answer questions about the company. Measures the strength of brand awareness. Reputation Core Index: The measure of corporate reputation used in the study. A combined score that answers the questions ‘Do you like company x?’, ‘Do you trust company x?’, and “Do you respect company x?’ Products and services: The term used for a group of reputation drivers reflecting the quality of the company’s offering. • • • • •

X offers high-quality products/services X meets customer needs X offers products/services products/services that are good value for money X is is an innovative company X produces its products/services products/services in a sustainable way

Corporate behavior: The term used for a group of reputation drivers reflecting a company’s actions and business behavior. • X acts ethically • X is open and transparent about the way the company operates • X has a positive influence on society •• X c ares environment X cares cares c ares for for the its employees Relationship: The term used for a group of reputation drivers reflecting the quality of the company’s relationship with its customers. • X involves the customer in the creation of new products/services • X delivers delivers on its promises • X is open to criticism and suggestions for improvement • X communicates in an honest and sincere way • X offers offers good customer service Financial performance: The term used for a group of reputation drivers reflecting a company’s financial performance. • X is a profitable company • X has has a capable leadership leadership

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The Study

with which an image of a company is created in an individual’s mind’s eye – is an advantage.

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A more qualitative approach to brand awareness building positive associations that are easily accessible in the minds of stakeholders – is therefore a key to a strong reputation. And the more closely this ‘Mind Space’ is linked to a company’s products and services, the better.

Brand Awareness is not Enough, Building a Strong ‘Mind Space’ and Positive Connotations is Key Only respondents claiming to know the companies that were surveyed ‘fairly’ or ‘very well’, and could spontaneously associate things with the company, were allowed to answer the subsequent questions on the drivers of reputation, meaning all respondents effectively were brand-aware of the participating companies. Seventy-eight per cent of respondents found it easy to come up with spontaneous associations with a company, and the Reputation Core Index was 43% higher among that group. In other words, occupying a customer’s ‘Mind Space’ – the ease

When respondents were asked to define these connotations, 53% defined them as positive, 38% as neutral, and 9% thought of them as negative. Unsurprisingly, associating negative things with a company is linked to a low reputation score. But what was surprising was the significant difference in impact upon reputation found between neutral and positive associations. Positive associations resulted in an average Reputation Core Index that was 60% higher than that of neutral associations. Clearly a more qualitative approach to brand awareness – building positive associations that are easily accessible in the minds of stakeholders – is therefore a key to a strong reputation. And the more closely this ‘Mind Space’ is linked to a company’s products and services, the better. These findings were true for all markets, age groups, and industries covered in the study. So, in a world where businesses and brands are constantly battling for attention, simply grabbing people’s attention is not enough. Organizations need to generate positive ‘Mind Space’, if they are to build a robust reputation.

Share of respondents who thought it was easy versus difficult to identify things they associate with a company in the survey

Share of positive, neutral, and negative associations Difficult

 Positive

Easy

Negative  Neutral

22%

09%

78%

38%

53%

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The Study

Dominant brands are not only recognized, they also occupy ‘Mind Space’ in relevant stakeholder groups that is in line with the qualities with which the brand wishes to be associated. Creating a robust and relevant ‘Mind Space’ goes beyond creating brand awareness. A company not only needs to grab attention and make stakeholders aware of its existence, it needs to create an impression that allows one to easily attribute characteristics to the brand, thus increasing the chances of making it the brand of choice. In this respect, ‘Mind Space’ can be said to be the quality of awareness about a brand.

How do we defi define ‘Mind Space’?

Brand  

In today’s world of speed and transparency, ‘Mind Space’ is created from a number of brand conversation sources. sources. What do we think of when we hear a particular brand name? How automatically were those connotations invoked? Are the characteristics we ultimately associate with a brand in line with the desired brand positioning?

x

A robust ‘Mind Space’ requires two parts. The things one associates with a company need to be easily drawn upon, thus making the process intuitive: if a person has to spend time going through structured thought in order to in work outawhat they think, thenprocess the ‘Mind Space’ question is already weaker than if sentiments are gut-felt. Secondly, the associations need to reflect a positive, company-specific understanding understanding of the brand. If the association associations s are generic and equally true for all companies in the industry, ‘Mind Space’ is also weakened.  

Positive associations linked to a stronger Reputation Core

Neutral associations lead to a much weaker reputation

85 Positive   associations

Neutral associations

0 Reputation Core

Company I like

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Company I trust

Company I respect

 

The Study

The importance of building positive associations is also confirmed at the industry level, with level, with levels of corporate reputation being significantly higher among respondents who associated positively with a company versus those who demonstrated more neutral associations. This was true across all industries. One interesting observation here is that the positive impact of ethical business behavior and drivers including ‘acts ethically’, and ‘produces its products in a sustainable way’ is much stronger

Citizenship dimension drivers linked to type of association

Pharma   s   n   o    i    t   a    i   c   o   s   s   a   e   v    i    t    i   s   o    P

among respondents who judge their own associations to be negative than among respondents who associate positive things with a company. For this group of respondents, the questions related to ethical business behavior have a bigger impact on corporate reputation than drivers related to product and service quality, value for money and meeting customer needs. How the financial performance of a company is perceived is also dependent on whether the respondent judges the things they associate with a company

Acts ethically

Positive influence on society

Open and transparent about the way the company operates

Cares for the environment

Consumer electronics

Cares for its employees

FMCG

  s   n   o    i    t   a    i   c   o   s   s   a    l   a   r    t   u   e    N

  s   n   o    i    t   a    i   c   o   s   s   a   e   v    i    t   a   g   e    N

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Internet

 

The Study

to be positive, neutral, or negative. For respondents with positive associations, ‘profitable company’ has a slightly positive impact on corporate reputation, whereas for respondents that judge their associations as negative, the profitability has a strongly negative impact on reputation. An interesting observation is the large impact of capable leadership among respondents with negative associations. One explanation for this could be that respondents with negative associations put more trust in a company’s leadership to change the perceived negative aspects of their business.

Financial performance drivers linked to type of association

Profitable company

Good potential for future growth

Capable leadership

Delivers better financial results than its competition

Clear vison for its future

  s   n   o    i    t   a    i   c   o   s   s   a   e   v    i    t    i   s   o    P

Pharma

From the below, we can see that the attitude of the target group not surprisingly has a large impact on corporate reputation, and also that the relative contribution of different drivers varies significantly between respondents with positive and negative attitudes. Again, this highlights the need to adapt communication to the relevant audience, based on a thorough understanding of their attitudes and motivations.

Consumer electronics

FMCG

  s   n   o    i    t   a    i

  c   o   s   s   a    l   a   r    t   u   e    N

  s   n   o    i    t   a    i   c   o   s   s   a   e   v    i    t   a   g   e    N

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Internet

 

The Study

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FINDING

services have have • Products and services the greatest influence on corporate reputations in China as well as the other markets surveyed, but corporate behavior is a stronger driver in China than the rest of the world. • Acting ethically ethically is the most important driver for  pharma  pha rmaceu ceutic tical al com compan panies ies in China. • Environmental aspects are

Actions Speak Louder

more important for the Internet industry in China. • Company vision is an important driver for the  financi  fina ncial al dim dimens ension ion on corporate reputation. • Environmental care is an important contributor to corporate behavior. • Delivering on promises strengthens relationships and corporate reputation.

all countries surveyed. This dimension is made up of five different drivers, dr ivers, which together reflects the quality of the company’s offering.

Than Words What is the strongest driver of corporate reputation among the general public? To answer this question and others, we analyzed the degree to which different attributes of the four reputational dimensions (perception of products and services; perception of corporate behavior; perception of financial performance; and strength of relationship) drive reputation. Perception of products and services showed the strongest correlation to the Reputation Core Index, thus the strongest reputation driver in China and

After products and services, corporate behavior (the degree to which a company is perceived to be doing business in an ethical, transparent way) correlated most strongly with a high Reputation Core Index. For companies that scored low on the Reputation Core Index there is a clear correlation to low scoring on corporate behavior.

By contrast, financial performance has no statistical significance on corporate reputation in China, and is the least important driver for enhancing reputation among the general public across all markets surveyed. Financial performance and the quality of a company’s management obviously has a defining impact on many other stakeholders, not least investors, but it is not surprising that the general public can be said to form opinions about a company’s reputation first and foremost as consumers or citizens, rather than as investors. It’s worth noting that of the four dimensions Chinese respondents place greater importance on corporate behavior compared with the global results; the other dimensions were weaker than the global study. This challenges the thinking that Chinese consumers are indifferent to how companies conduct themselves publicly and affirms what we see – that as economic development and social progress benefits China, the public are increasingly more demanding and are expecting companies to live up to their t heir own standards.

Global

The Impact of Different Dimensions   on Reputation Core Index

China

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0 –

Financial   performance

Relationship

Corporate behavior 17

Products and services

 

The Study

The general public in China have higher expectations on the corporate behavior of pharmaceutical companies than of companies in the other industries under review.

On an industry level there are significant variations in how different reputation drivers contribute to the reputation core. We first look at the reputation drivers of two specific industry clusters – pharmaceutical and Internet – and then delve into four different dimensions amongst all four industry clusters. a. Acting ethically is the most important driver for pharmaceutical companies in China The reputation drivers for companies within the pharmaceutical industry display some unique characteristics: Although corporate behavior is important for all industries, it has a larger impact on reputation within the pharmaceutical industry. ‘Acts ethically’ is most important driver for corporate reputation in China and second most important in all industries. Of the top five reputation drivers in the pharmaceutical industry in China, three are related to products and services

(‘producing products and services that are good value for money’, ‘produces its products in a sustainable way’, and ‘offers high-quality products/services’) and two are related to citizenship and sustainability (‘positive influence on society’ and ‘produces its products in a sustainable way‘). Unlike the global study, delivering on its promises, capable leadership and innovation significantly impact reputations of pharmaceutical companies in China. It’s worth noting that there is a strong negative impact for the financial performance of pharmaceutical companies and a level of cynicism about their growth prospects in China. This may be related to the government anticorruption campaign in the pharmaceutical industry which highlighted a number of problems. This leads us to believe that people have ha ve higher expectations on the corporate behavior of pharmaceutical companies than they do of companies in the other three industries under review, perhaps more so in China.

Global

Top reputation drivers in the pharmaceutical industry

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China

 

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1. Offers high quality products/servic products/services es

8. Has a positive influence on on society society

2. Offers products/services products/services that are are good value value for money

9. Is a profitable profitable company

3. Produces its products/services products/services in a sustainable sustainable way 4. Acts ethically

10. Has a capable leadership 11. Offers good customer service

5. Meets customer needs

12. Is an innovative company

6. Communicates in an honest honest and sincere way

13. Has good potential for future growth

7. Is open and transparent about about the way the company operates

14. Delivers on its promises

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The Study

b. Environmental aspects are more important for the Internet industry in China Companies within the Internet sector also display an industry-specific pattern.

Respondents in China clearly see companies  playin  pla ying g a par partt in in cari caring ng  for the env enviro ironme nment. nt.

By far, offering high quality products and services is the most important driver in China and the other markets in the global study. That’s where the similarities end. In China, environmental aspects are more important with sustainable production and care for the environment among the top drivers. With growing public concern in recent years about pollution and natural resource degradation, respondents in China clearly see companies playing a part in caring for the environment.

Like the pharmaceutical industry, acting ethically is a significant driver of corporate reputation in China. Unlike the global study, providing products and services that are perceived as ‘value for money’ is a core driver of corporate reputation in China. It’s worth noting that ‘open and transparent about the way the company operates’ and ‘capable leadership’ are not significant reputation drivers in China compared with global results. This may reflect a certain reality that many companies in China, Internet or not, have some element of state ownership thus its operations and leadership are inconsequential.

Global

Top reputation drivers in the Internet industry

China

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1.

Offers high quality products/servic products/services es

2.

Offers products/services products/services that are are good good value value for money

10. Is open and transparent about about the way the company operates

3.

Produces its products/services products/services in a sustainable way

11. Has a positive positive influence on society

4.

Acts ethically

12. Is a profitable company

5. 6.

Is an innovative company Meets customer needs

14. Has a clear vision for its future

7.

Cares for the environment

15. Has good potential potential for future growth

8.

Delivers better financial financial results than its competition competition

9.

Communicates in an honest and sincere way

16. Involves the customer customer in the creation of of new products/services

13. Has a capable leadership leadership

17. Offers good good customer customer service

19

16

17

 

The Study

C. Company vision is an important driver for the financial dimension on corporate reputation

While company profitability isn’t an important aspect for corporate reputations, delivering better financial results over its competitors is consequential – this is  partic  par ticula ularly rly the cas casee for for  pharma  pha rmaceu ceutic tical al and Int Intern ernet et companies.

Overall, financial performance of a company is not a positive driver for corporate reputation among the general public in China and globally, but we do see some statistically confirmed differences between industries. Additionally the impact of this dimension appears to be affected by pre-existing views respondents may hold about a company. We see wider acceptance for financial performance as a driver of corporate reputation especially in the FMCG and Internet industries in China. And while company profitability isn’t an important aspect for corporate reputations, delivering better financial results over its competitors is consequential – this is particularly the case for pharmaceutical and Internet companies. In general, the company’s leadership have positive contributions to corporate reputations, especially in the pharmaceutical and FMCG industries. Potential for future growth is particularly important in the consumer electronics industry.

Company vision is more important in China that what we see globally. global ly. This is particularly notable in the Internet industry where vision is ranked much higher than capable leadership. In the past, Internet companies in China were built around CEOs who became celebrities and role models. However, the industry’s rapid development and the boom-and-bust of copycat Internet ventures disappointed Chinese consumers who have high expectations. Therefore, genuine innovation has become an indicator of a company’s value and true differentiator. This backs the point that innovation is regarded highly as a reputation driver in the Internet industry. With the exception of FMCG, a high profit margin has a negative impact on the reputation of all three other industries in the global study: ‘profitable’ seems to be seen seen as a dirty word. In the FMCG and Internet industries, strong company leadership has a positive impact on corporate reputation but we do not see the same pattern in the pharmaceutical and consumer electronic industries. For consumer consumer electronics electronics and Internet businesses, a perceived potential for future growth has a positive impact, yet by contrast, there is no statistically confirmed relationship between this driver and the reputation of companies in the pharmaceutical and FMCG industries.

Global

Top reputation drivers of  of  the  the financia nanciall dimension within the pharmaceutical pharmaceutical industry

China

+

0

Has a capable leadership

Delivers better financial results than its competition

– 20

Has a clear vision for its future

Has good potential for future growth

Is a profitable company

 

The Study

Top reputation drivers of the financial dimension within the consumer electronics industry

Global China

+

0 Has good potential for future growth

Has a capable leadership

Has a clear vision for its future

Delivers better financial results than its competition

Is a profitable company



Top reputation drivers of the financial dimension within the FMCG industry

Global China

+

0 Has a capable leadership

Has good potential for future growth



21

Delivers better financial results than its competition

Has a clear vision for its future

Is a profitable company

 

The Study

Top reputation drivers of the financial dimension within the Internet industry

Global China

+

0 Has a clear vision for its future

Delivers better financial results than its competition

Has good potential for future growth



22

Has a capable leadership

Is a profitable company

 

The Study

d. Environmental care is an important contributor to corporate behavior

Compared to the global results, environmental care is more important in China, but surprisingly producing in a sustainable way has no statistical significance  for any of the ind indust ustrie ries. s.

Companies’ commitment to social issues seems to be largely judged as a sum of their perceived overall contribution to society. Acting ethically and positive influence on society have significant impact on reputation core, and a change in this driver will bring about the greatest change for corporate reputation across all industries. In China, we see a higher regard for social influence in the FMCG and consumer electronics industries, which perhaps reflects a direct relationship between brand visibility and community interest.

Surprisingly, care for employees has a low impact on corporate reputations, particularly in the pharmaceutical industry. Compared with global study, concern for the environment is perceived to be more influential than care for employees. The fact that it was targeted tar geted for corruption in China suggests that better treatment of company employees would have strengthened ethical behavior and improved reputations.

It’s especially notable that environmental care is more important in China, but producing in a sustainable way has no statistical significance for any of the industries. One could argue that Chinese consumers understand the value of protecting the environment but aren’t willing to pay more for products that are produced more sustainably as they often come at a higher cost.

Impact of the corporate behavior dimension on the Reputation Core Index

Acts ethically Open and transparent about   the way the company operates Positive influence on society Cares for its employees Cares for the environment

+

0 –

Pharma

Consumer electronics

FMCG 23

Internet

 

The Study

Top reputation drivers of the corporate behavioral dimension within the pharmaceutical industry

Global China

+

0 Acts ethically

Has a positive influence on society

Cares for the environment

Is open and transparent about the way the company operates

Cares for its employees



Top reputation drivers of the corporate behavioral dimension within the consumer electronics industry

Global China

+

0 Has a positive influence on society

Acts ethically



24

Cares for its employees

Is open and transparent about the way the company operates

Cares for the environment

 

The Study

Top reputation drivers of the corporate behavioral dimension within the Internet industry

Global China

+

0 Acts ethically

Has a positive influence on society

Is open and transparent about the way the company operates

Cares for its employees

Cares for the environment



Top reputation drivers of the corporate behavioral dimension within the consumer FMCG industry

Global China

+

0 Has a positive influence on society

Acts ethically



25

Cares for its employees

Cares for the environment

Is open and transparent about the way the company operates

 

The Study

e. Delivering on promises strengthens relationships and corporate reputation

Interestingly, we see a high level of openness across all four industries under review in China where being open to criticism and suggestions for improvement impact corporate reputations, especially in the consumer electronics industry. Part of this may be related to significant policies at protecting consumer rights in China and the industry’s response by welcoming suggestions for improvement and publicizing it.

When it comes to the ‘relationship’ dimension of reputation (reflecting the

Involving customers in creating new products and services reflects a deeper level of customer engagement in China that strengthens the relationship dimension.

quality of a company’s relationship with its customers), delivering on its promises and good customer service are the main drivers in China. This seems reasonable as Chinese consumers buy a product or service from a business, thereby establishing a relationship, albeit a transactional one. When companies fail to provide or deliver, consumers begin to doubt and lose trust, which ultimately erodes the relationship.

Another notable item is the involvement of customers in creating new products and services in China with all industries offering some level of participation. This aspect was missing at the global level; there was no statistical significance in the FMCG industry. This reflects a deeper level of customer engagement in China that strengthens the relationship. It also best illustrates that actions do speak louder than words.

This is starkly different from the global study where communicating in an honest and sincere way is the most significant driver of this dimension. The Internet industry in China is the only cluster that places considerable importance on this aspect. In an industry that operates in a virtual world being authentic and truthful are paramount to corporate reputations.

Delivers on its promises

Impact of the relationship dimension on the Reputation Core Index

Communicates in an honest and sincere way

 

Offers good customer service Is open to criticism and suggestions for improvement Involves the customer in the creation of new products/services

+

0 –

Pharma

Consumer electronics

FMCG 26

Internet

 

The Study

Top reputation drivers of the relational dimension within the pharmaceutical industry

Global China

+

0 Delivers on its promises

Offers good customer service

Communicates in an honest and sincere way

Is open to criticism and suggestions for improvement

Involves the customer in the creation of  new products/ services



Top reputation drivers of the relational dimension within the consumer electronics industry

Global China

+

0 Delivers on its promises

Offers good customer service

Is open to criticism and suggestions for improvement



27

Communicates in an honest and sincere way

Involves the customer in the creation of  new products/ services

 

The Study

Top reputation drivers of the relational dimension within the FMCG industry

Global China

+

0 Delivers on its promises

Offers good customer service

Communicates in an honest and sincere way

Involves the customer in the creation of  new products/ services

Is open to criticism and suggestions for improvement



Top reputation drivers of the relational dimension within the Internet industry

Global China

+

0 Delivers on its promises

Communicates in an honest and sincere way

Offers good customer service



28

Involves the customer in the creation of  new products/ services

Is open to criticism and suggestions for improvement

 

The Study

6

The B2B industry earned the highest reputation core scores in China; Consumer electronics  placed  pla ced firs firstt globa globally lly..

FINDING

Global Brands, Local Reputation A global corporate reputation might well be the sum of local reputations in each individual market, but how reputation is constructed in those markets means that each must be attended to with insight and care. This is a significant challenge not least given the growing importance (and reach) of web-based communication. Respondents in China are more positive po sitive of the reputations of the companies in the study, where reputation scores ranged from 84 to 63. A more telling story are the differences between industry clusters: the B2B industry earned the highest reputation core scores in China, well above consumer electronics and retail industries and compared to being ranked sixth out of seven in the global study. In China, the Internet industry ranks sixth in China, which is far from second place globally. The differences might be explained by ‘mind space’: consumer-focused industries with a higher relatability for the general public have a higher reputation score in the study. Another part could be attributed to the idea of respect and how it’s related to knowledge. The average Chinese consumer may not be knowledgeable about B2B companies but it doesn’t preclude them from respecting them, especially if they are Fortune 500 Companies. Third-party or independent rankings provide some assurance of positive corporate reputation but this also raises the question about what really generates like, trust and respect. As far as local differences within the global survey findings are concorned, two particular areas stand out:

29

1. Europeans are more skeptical about companies than respondents from the BRICS The average Reputation Core score for companies was 66, across the 10 countries surveyed. However, the study found that reputation varies significantly between countries and companies: the lowest Reputation Core score was 28 and the highest 91. Examining different regions we observed that Europeans rate companies much lower than their counterparts in North America do, who in turn lag behind respondents in the BRICS countries surveyed – Brazil, India, China and South Africa. Indian respondents produced the highest average Reputation Core score of 79, while Swedish respondents evidenced the lowest average Reputation Core score of 51. The study demonstrates that in general, Indians hold corporations in very high regard, with the lowest Reputation Core score among the companies surveyed being 72. These differences observed between ‘the old world’ and ‘the new world’ underline the need for a finely-tuned reputation strategy, one that avoids a ‘standardized’ global definition of reputation.

 

The Study

2. There are considerable market variations when it comes to a company’s reputation score

For example, GlaxoSmithKline has a Reputation Core Index score between 42 and 81, the highest being in India and the lowest in Sweden. On the other hand, AstraZeneca sees its Reputation Core score vary between 52 in Canada and 84 in Brazil. Taken together with the previous finding regarding different population’s overall attitudes to and views of corporations (less skeptical in Asia, more so in Europe), this highlights the challenges facing marketing communications leaders at global brands, and the clear need for local knowledge of the stakeholder environment.

Globalization has become one of the most dominant business trends in the last three decades, and a significant amount of corporate and marketing communications work is carried out with the purpose of building a robust, global corporate brand. Indeed, the brands we have studied in this research are companies with an impressive global presence. The study demonstrates that despite having high brand awareness in all markets, a company’s brand can have a markedly different reputation in individual countries. We found numerous examples where both the strength of the Reputation Core and the associations people make with, and discussions they have about brands were very different.

Sector scores for the 7 industries covered in the study

Global China

+

69

81

72

80

71

80

79

79 69

75

78 73

77 71

0 B2B

Healthcare

Automotive

Banking/ financial services



30

Consumer electronics

Internet

Consumer retail

 

The Study

Showing the difference in   Reputation Core across countries

New world

Stronger

  e   r   o   c    S   n   o    i    t   a    t   u   p   e    R

79

India

76 75

Brazil China

74 

South Africa

67

United States

64  

Canada

61

United Kingdom

60

Germany

59 51

Weaker

France Sweden

Old world

31

 

The Study

The Reputation Core score of  GlaxoSmithKline in different countries

90

81 76 69

67 57

56

56

54

52 42

0 –

India

Brazil

China

South Africa

Canada

United  States

United Kingdom

Germany

France

Sweden

58

57

56

54

52

52

F rance Fr

United Kingdom

Sweden

Canada

The Reputation Core score of  AstraZeneca in different countries

90

84 78

77 68

0 –

Brazil

China

India

South Africa Germany

United  States

Globalization has become one of the most dominant business trends in the last three decades. 32

 

The Study

7

has shown a link between a high NPS score and business success in terms of sales.

FINDING

Use it, Like it, Recommend it: The Drivers of Recommendation (NPS) • Reputation drivers linked to actual consumer experience are more important for driving NPS than they are for corporate reputation. • There are some some differences differences between industries, but those differences are not as distinct as for the drivers of reputation. Some have called it ‘the ultimate question’: Would you recommend a company to a friend or a colleague? Our survey attempted to answer this question by asking respondents to tell us how likely they were to indeed recommend the companies surveyed. Respondents were asked to rate a company from 0 (‘not at all likely’) to 10 (‘very likely’). By looking at the number of ‘9’ or ‘10’ answers and subtracting them from the 0–6 answers, the survey produced an NPS. While an NPS can be negative, most successful companies have a number of dedicated promoters or fans and therefore a high NPS score (more than +50). Independent research 2 

Reputation dimensions as drivers of NPS

In this study we correlated high NPS scores (where respondents indicated either 9–10) with the Reputation Core. In all countries, there was a clear correlation between a strong reputation and a high NPS score. While this conclusion in itself won’t raise many eyebrows, we were able to further analyze the factors behind this correlation and uncover precisely which reputational elements have the strongest impact on NPS. What we discovered is that the area of reputation that is most strongly linked to a high NPS score is the perception of products and services. As was the case with overall reputation, the dimension with the least impact on NPS among the general public is a company’s financial performance.

2. Marsden, P, Alain Samson and Neville Upton (2005), ‘Advocacy Drives Growth’, Brand Strategy (198), pp.45–47.

 

+

0 –

Financial   performance

Relationship

Corporate behavior

Products and services

33

 

The Study

The area of reputation that is most strongly linked to a high NPS score is the  percep  per ceptio tion n of of prod product uctss and and services.

As for any differences between markets with regard to what drives NPS, we found none. In all markets, being good at delivering your offering builds recommendation levels the most.

products being seen as value for money and meeting customer needs.

At the industry level, we did see some differences with regard to what drives NPS, but those differences are not as significant as for the reputation drivers. One interesting variation is that a company’s financial performance is a positive factor for NPS in the consumer electronics, FMCG, and particularly the internet industries. Only where the pharmaceuticals industry is concerned do we see a negative impact. One further difference is that the relationship dimension is more important, and will become even more important, when compared to ethical business behavior as a driver of NPS within the consumer electronics industry.

of this dimension on corporate reputation. ‘Caring for employees’ has the third largest impact in the category for NPS, but this piece is of low significance when it comes to building corporate reputation.

While the importance of the different dimensions where NPS is concerned is much the same as it is for the Reputation Core Index, the ranking of the specific drivers is slightly different. ‘Offers high-quality products and services’ still has the largest impact, but ‘produces its products in a sustainable way’ has a bigger impact on NPS than

above we can see that the drivers linked to actual consumer experience are more important for driving NPS than for corporate reputation. This underlines the need to carefully evaluate and balance the message depending on the purpose of, and audience for communication.

NPS Driver Strength by Industry

To have a ‘positive impact on society’ is more important for NPS than to ‘act ethically’, which is similar to the impact

With regard to the relationship dimension, the ranking is also different. ‘Delivering on promises’ is the most impactful question for NPS, followed by ‘delivering good customer service’ and ‘communicating in an honest and sincere way’. This is also the inverse of the ranking where impact on reputation is concerned. Not surprisingly, from the observations

 Financial performance  Relationshiip  Corporate behavior  Products and services

+

0 –

Consumer electronics

Internet

FMCG

34

Pharma

 

The Study

8

The importance of  percep  per ceptio tion n of of prod product uctss and and services is supported by our analysis of online content from the 10 sample companies.

FINDING

Social Media Discussions Reflect the Relative Impact of the Reputation Dimension on Corporate Reputation The Reputation Impact Indicator includes an analysis of the relationship between corporate reputation and discussions on social media. The importance of perception of products and services is supported by our analysis of online content from the 10 sample companies. For companies selling products directly to consumers, the proportion of social media content related to the products and services varied between 50–90%. Products and services is also the reputation area where we observed the most ‘organic’ posts, i.e. content and conversations that

Online content classified into the three dimensions of corporate reputation

are sustained without active involvement from the companies in question. A majority of the conversations relating to the company products and services were positive. Also in line with the importance of the reputation drivers, the other area where we observed a number of ‘organic’ posts was topics relating to a company’s corporate behavior. These topics created a high degree of engagement, with conversations focused on ethical conduct, transparency, and consumer rights. In contrast with conversations around core business, most of the conversations around corporate behavior were negative. Linking this to the main area of research, we noticed, not iced, perhaps unsurprisingly, that companies with a poor corporate reputation, evidenced by a low Reputation Core Index, appeared so largely due to negative perceptions of their position on corporate behavior.

 Perception of products and services  Perception of corporate behavior/ behavior /CSR Perception of financial performance

1.  McDonald’s 2 . BP 3. GoldmanSachs 4 . Citibank 5. Shell 6 . PayPal 7. Microsoft 8 . Johnson & Johnson 9. Samsung 10.. Google 10 10

20

30

40

50

60

70

80

Values in percentage points, from data derived through a qualitative and quantative analysis of a sample of content for each company in each of the 10 countries.

35

90  

10 0

 

The Study

9

36% of the respondents in the study said that online channels are their main source of information about companies.

slope suggests some groups may be targeted.

FINDING

We also see a link between reputation scores and the educational level of the respondents with the highest reputation

Demographics and Media Habits Matter The development of the Reputation Core Index among different age groups in China follows a different pattern in each of the four industries. Where Internet companies are concerned, reputation is highest in the years immediately after university and lowers among middle-aged respondents but rises again at 51-55 years. The FMCG and consumer electronics industries follow each other closely until about 36 years where they start diverging – FMCG reputation is highest among the 46-50 year olds. The reputation of pharmaceutical companies is the most striking – the reputation score peaks among 51-55 year olds but are the lowest in the age groups before and after. This differs widely from other industries where scores generally weaken after 50 years. This reveals a remarkable picture of Chinese consumers whose perceptions about corporate reputation shift widely in old age. It’s reasonable to expect strong reputation scores for pharmaceutical companies for older respondents– there’s an increasing need for medicines and other health services when we age. But the dramatic rise and

scores emerging from respondents with college or university degrees among all industries. We also found high reputation scores among respondents with secondary education levels in the FMCG and pharmaceutical industries. Students seem to be generally skeptical in the study with lower reputation scores overall, except for the consumer electronics industry where it rated high. This suggests that more education increases knowledge and improves understanding about companies, thus helping them form positive opinions about reputation. The study also reveals a relationship between online thetime spent Reputation Corehabits Index:and more online results in a higher reputation score. This is particularly evident in the pharmaceutical industry followed by FMCG and consumer electronics. Surprisingly, those who spent less than one hour online scored consumer electronics companies higher. The research highlights the increasing importance of digital channels as a source of company information. Whether it comes from corporate websites or social media, online content is critical to reputation management.

Secondary

Reputation Core Index and education level*

College, university Still studying

+

0 –

Prescription drugs

FMCG

* Primary school were excluded due to the low number of respondents

Internet

Consumer electronics

36  

The Study

Industry Reputation Core Index by age group* in China

Prescription drugs FMCG Internet Consumer electronics

100

0 16–17

18–22

23–26

27–32

33–35

36–40

41–45

46–50

51–55

56–60

* Age 16-17 and 56- were excluded due to the low number of respondents

Industry Reputation

Pharma

Core Index by age group in Global

Consumer electronics FMCG Internet

80

0 16–17

18–22

23–26

27–32

33–35

36–40

41–45

46–50

51–55

56–60

61–65

65+

37

 

The Study

Reputation Core Index and education level

 Primary  Secondary  College, university  Still studying

80

40

0 Pharma

Consumer electronics

FMCG

Reputation Core Index and  online usage

Internet

Less than 1 hour  1–3 hours  3–6 hours  More than 6 hours

80

40

0 Pharma

Consumer electronics

More time spent online results in a higher reputation score

FMCG

Internet

39  

The Observation

The Observations “...A company that is lit up from the inside and committed to use its influence for the betterment of individuals or society speaks to the heart of Chinese people, thus earning unconditional  trust – and strengthening "Mind Space” – from stakeholders.” 

Lusha Niu Director

40  

The Observations

In the Age of Earned Trust, is Your Corporate Reputation Reputable?

The meaning of reputation differs around the world – the meanings aren’t always precise but they’re also not incorrect. The MSLGROUP Reputation Impact Indicator study is our attempt to fill in the gaps and present a logical, reasonable, and actionable solution to the reputation puzzle. We now understand three important conclusions from this research: 1) While brands can be global, a company’s reputation is very much shaped at a local level; Lusha Niu   Director for MSLGROUP China

2) The ‘Mind Space’ of stakeholders has significant influence over a company’s reputation; 3) To develop reputation-enhancing content for a company, we need to identify specific reputation drivers and address the reputation core. Armed with this knowledge, how can I build, re-build, maintain or improve the reputation of the company I work for or own? Trust at first sight does exist in China Chinese people are characteristically suspicious – we have been ingrained to cast doubt on everything in our lives. So when we learned that China is more optimistic about the reputations of companies, we didn’t believe it. Yet the results spoke for themselves: Chinese respondents on average gave higher reputation scores to the 41 companies in the study, and respondents from Sweden, France, Germany and the United Kingdom are comparably more skeptical. We are actually living in a less ‘harsh’ part of the world and we don't realize it. Great news but what can or should we do with this new information? Develop trusting relationships with our stakeholders by delivering on our promises Our study shows that among four industry clusters (Pharma, FMCG, Internet, and Consumer Electronics), Chinese respondents rank ra nk ‘delivers on its promises’ as the number one driver of a company’s reputation when looking at the strength of its relationships with customers. This aspect doesn’t even register on some industries at the global level. Why is that?

41  

The Observations

Just as the oxytocin hormone in the human brain could increase trust, ‘Mind Space’ is your corporate oxytocin. If we can build a stronger ‘Mind Space’ in people, we can move the needles of corporate reputation to make it more trustworthy.

The answer lies in Wuchang (‘ ’) or the Five Constant Virtues of Confucius. He regarded Xin () as one of the five most important values of humanity, which had become compromised during the last four decades of China’s opening up. It’s inevitable that some areas are overlooked to allow a nation to prosper economically. However, individuals, businesses and the government suffer in various ways. Now we are beginning the process of restoring that trust and people are quickly valuing trust more than ever before. Before, Internet start-ups could excel in business with a star CEO, but now, they have to deliver on their promises just to stay in the competition. Consumer electronics companies can no longer rely on the clout of brand names and fancy new product launches to keep market share – they have to deliver on their t heir promises. Companies in the FMCG and pharmaceutical industries must also change to preserve their reputations in China. Reputation-enhancing content is not what it is, but what it can be Companies need to do more than just grab attention, it needs to create an impression that allows stakeholders to easily think about it thus increasing the chances of making it the brand of choice. We call this ‘Mind Space’ - the strength or quality of brand awareness – and there is a positive correlation between ‘Mind Space’ and a company’s reputation. Just as the oxytocin hormone in the human brain could increase trust, ‘Mind Space’ is your corporate oxytocin. If we can build a stronger ‘Mind Space’ in people, we can move the needles of corporate reputation to make it more trustworthy. So how exactly does that work?   Move away from ‘we know best’ and move into ‘we know how to make it best for you’ This is not easy. It requires a 180-degree change in mindset, but this should be the guiding principle of any business that wants to succeed in China today. When describing corporate behavior, both Chinese and global respondents rank ‘has a positive influence on society’ top of the list across all industry clusters. But what does ‘positive influence on society’ mean in today’s China context? Our study shows that China values an inspiring and uplifting company vision more than other countries. A company that is lit up from the inside and committed to use its influence for the betterment of individuals or society speaks to the heart of Chinese people, thus earning unconditional trust – and strengthening ‘Mind Space’ – from stakeholders. Companies, large or small, are in great need – more than ever before – of defining and presenting its own vision to local audiences and ensuring all actions and operations support this locally. Some of the most successful global companies failed our reputation test in China because they never spoke to the ‘Mind Space’ of Chinese consumers. Companies that rely on Hong Kong or Singapore as their gateway to mainland China today limit their chances to go through that gate in the future. As our study proves, reputation is your license to operate and it definitely is local.

42  

The Observations

Mastering the balancing act between the court of law and the court of public opinion can help build a reputable local operation We have seen too many examples of companies succeeding in the rule r ule of law but failing miserably in the court of public opinion in China. As we operate in the age of earned trust, even courts are sometimes constrained by public opinion. With the absence of any formal government lobbying mechanism in China, the only effective channel left for companies to change public perceptions is by having a direct conversation with the public and the respected elite. Make communication strategy part of your China business strategy Parachuting a US or European-centric communication framework to China does not increase your company’s reputation locally. China no longer admires other people or other countries for their qualities or traits. China admires companies that are truly improving the lives of its people, leaders for inspiring employee excellence, and behaviors that are a re full of care and respect. As communications becomes even more fragmented and digitized by the second, a sound reputation is no longer a life-long goal. How can we communicators seize that high reputation moment and maximize it before the next trend or moment arrives? Money and effort aside, it takes wisdom and knowledge to transform that what it is today to what it can be tomorrow. At MSLGROUP, we believe the journey to help businesses succeed in the age of earned trust is just beginning: A reputation in China is your relationship with China.

43  

About the Editor:

About the Editor for China Section:

Pär Uhlin is a consultant in the Corporate Communications practice at MSLGROUP in Stockholm. He has a rich experience from communication in a global environment, and has spent

Tzyy Wang applies nearly two decades of corporate advisory and strategic communications communication s expertise in the US and China to enhance MSLGROUP China's reputation-building initiatives.

15 years Asia working at MSLGROUP offices in in Beijing, Hong Kong, and Shanghai. Pär has been a senior advisor to several large multinationals in Asia and has considerable experience in both crisis and reputation management. management. He has a Bachelor’s degree in Business Administration Administratio n with a Major in International Marketing, and a Master’s degree in Asian Studies, from the University of Stockholm, Sweden.

She particularly focuses on producing impactful content for audiences and enriching teams with global viewpoints.

 

44  

About MSLGROUP We are Publicis Groupe’s strategic communications and engagement group, advisors in all aspects of communication strategy: from consumer PR to financial communications, from public affairs to reputation management, and from crisis communications to experiential marketing and events.

About MSLGROUP China As a Business-Driven Communications Consultancy, we’re focused on delivering INTEGRATED, creative programs through data-based INSIGHTS, and driven by making a real IMPACT on business through strategic communications in the digital age. MSLGROUP China is a full-service strategic communications and social engagement consultancy with more than 200 staff in Beijing, Shanghai, Guangzhou and Chengdu delivering business results for some the named world’s most valuable brands. We of were ‘China Agency of the Year’ twice t wice within four years by The Holmes Report. MSLGROUP also won accolades from SABRE, the International PR Association, the China PR Association, the International Business Awards, and China’s New Media Festival.

45  

MSLGROUP.CN Wei Wei Marketing Head [email protected]

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